Achaogen (AKAO): What Do the FDA’s Briefing Documents Mean for Wednesday’s Big AdCom Meeting? H.C. Wainwright Weighs In

H.C.


Achaogen Inc (NASDAQ:AKAO) shares are on an almost 7% bounce on back of positive briefing documents unveiled by the FDA this morning. Investors are taking this as an encouraging indication; one hinting at approval of complicated urinary tract infection (cUTI) candidate plazomicin come Wednesday’s meeting of the Antimicrobial Drugs Advisory Committee (AMDAC).

H.C. Wainwright analyst Ed Arce cheers, “We find no big surprises in the FDA analyses,” reiterating a Buy rating on AKAO with a $29 price target, which implies a close to 108% upside from current levels. (To watch Arce’s track record, click here)

Consider that this drug, whose indication includes treatment of acute pyelonephritis (AP) and bloodstream infections (BSI), in adults has hit key marks of success in two pivotal trials: EPIC in and CARE. “While the Agency highlights multiple confounding issues in the statistical analysis of the available clinical data (primarily for the BSI indication), as has long been anticipated, we continue to expect a positive panel vote this Wednesday (though not unanimous) for both indications, given (1) plazomicin approval would be reserved for use in patients who have limited or no alternative treatment options; and (2) Achaogen seeks the BSI indication under the new Limited Population Antibacterial Drug (LPAD) approval pathway for use in ‘a limited and specific population of patients,'” asserts Arce.

These findings in cUTI seem to point to a forthcoming positive recommendation for AKAO, argues the analyst. Notably, the agency hosted further analyses when reviewing the efficacy posted in the EPIC trial in cUTI and AP patients to tackle missing data from a conservative approach. The analyst contends that the results underscored that AKAO’s treatment stands noninferior to meropenem. As such, this led the FDA to surmise that the NI conclusions of the primary analysis lack sensitivity to the method for dealing with missing data.

As far as the safety front, the agency anticipates that therapeutic drug monitoring (TDM) could prove valuable in mitigating nephrotoxicity spurred by plazomicin; and there lies gaping skepticism regarding the risk of nephrotoxicity in patients with baseline renal function of ClCr under 30 mL per minute.

Ultimately, “We expect a mixed panel vote, followed by FDA approval. Overall, we expect the panel discussion to focus primarily on the CARE study data and balancing the strong mortality benefit findings with the limited, largely descriptive statistics […] Ultimately, we anticipate positive AdCom votes for both indications (though split in BSI),” concludes Arce.

Achaogen is an early bullish favorite, according to TipRanks analytics. Every one of 4 analysts polled in the last 3 months bats for the bulls on AKAO stock. Notably, the 12-month average price target stands at $24.75, marking upside potential of nearly 81% from where the stock is currently trading.

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